Edition 125, June 2023

How to get online consumers to return less? Start working with them!

By Heleen Buldeo Rai, Vrije Universiteit Brussel

Every year an increasing number of e-commerce packages are shipped to consumers' homes. Plenty of ink has been spilled about the environmental impact of online purchases, but the truth is that they are not necessarily more harmful than store purchases. More so, when online purchases replace a shopping trip by passenger car, their environmental impact actually scores lower.

This is obviously not the case for the majority of e-commerce orders placed by urban consumers, who often obtain their necessities by walking or biking. The environmental benefit is also hard to sustain when consumers return (part of) their online purchase immediately after receiving it. After all, each return doubles the environmental impact of an online purchase and generates a great deal of unnecessary packaging and processes. For retailers, it is difficult to estimate which items will be returned when and in what quantity and quality, which prevents the reverse logistics system from efficiency.

Not only retailers' environmental impact suffers from rising return volumes, so does their bottom line. In these environmentally and economically challenging times, a research team in Belgium set out to explore what the e-commerce sector can do to prevent returns. The project was commissioned by the Belgian Deputy Prime Minister Petra De Sutter and explicitly explored non-monetary interventions. Given the ubiquity of free returns, charging for returns has already been studied widely by researchers. In a European setting, however, the margin for doing so is limited because of the ‘right to cancel’. This legislation gives online consumers a fourteen-day cooling-off period during which they can return a remotely made purchase free of charge.

The results of the research project are encouraging. We found that reducing returns in e-commerce is not only necessary, it is also possible. We discovered a wide variety of so-called ‘customer-based instruments’, aimed at providing more and better product information. These tools address the difficulties that consumers experience in appraising fit and style of products online. Fit and style issues are at the root of no less than 70% of returns.

Some of these customer-based tools are fairly simple for retailers to implement and easy for consumers to use. They include size charts, zoom-in options, detailed descriptions, product photos and videos. Their potential to curb online returns has been demonstrated. Testing the impact of size charts for trainers, one shoe retailer reported a reduction in return rate between 1.5 and 5%. A study focused on clothing found that a 1% increase in zoom usage was associated with a 7% reduction in returns. Adding more visual information also yielded positive results in a study focused on clothing, wines and cosmetics. Still, not every type of visualization is appropriate. One study found that when online consumers viewed 1% more images of products in various inspiring situations, the return rate actually increased by 5%! Retailers are best to prioritize photos and videos that communicate factual product information, rather than ones that create unrealistic expectations.

Other customer-based instruments are a little more sophisticated. Product recommendations, for example, which display size indications when products fall larger or smaller than expected. The data and analytics retailers need for this are significant, but they have been demonstrated to reduce return rates by 0.5 to 4% once implemented. Customer reviews are another one. Used and designed in the right way, they can lower the share of returns by up to 49%.

Finally, virtual and augmented reality, only modestly deployed for now but steadily emerging in the e-commerce sector. While virtual try-on enables consumers to select and/or personalize three-dimensional virtual models, augmented reality allows to add virtual data or images to the real world. A study focused on clothing revealed that with a return reduction between 29 and 54%, virtual fitting rooms are very effective. In addition to the resources they demand from retailers themselves, these tools are also more demanding to online consumers. it is important to clarify the benefits and to ensure ease of use.

The research report, accessible under ‘Resources’ in the Industry Research section of the Reverse Logistics Association website, discusses the studies in more detail. What is clear is that customer-based instruments deserve a priority in online retailers' return reduction strategy, to be implemented according to product types, consumer profiles and the specific return issues. While customer-oriented tools are the only ones that give consumers a more complete and realistic picture of the product range online, they can only provide information when consumers actually use them. Working with consumers to reduce returns is therefore essential.

Heleen Buldeo Rai
Heleen Buldeo Rai is a senior researcher at the Mobilise research group of the Vrije Universiteit Brussel. Supported by a fellowship from Research Foundation – Flanders, she specialises in e-commerce, urban logistics and sustainability. Heleen obtained a PhD in Business Economics at the MOBI research group of the Vrije Universiteit Brussel in 2019 in Brussels, Belgium and carried out postdoctoral research at the Logistics City chair of the Université Gustave Eiffel between 2020 and 2022 in Paris, France. Her doctoral thesis is titled “Environmental sustainability of the last mile in omnichannel retail”. Heleen has authored several scientific publications and published a best practice guide on sustainable e-commerce supply chains in 2021. The book was awarded by Platform Innovation in Marketing in 2022.